Chancellor says use of PERA retirees cost-effective, good strategy

The University of Colorado filled three key administrative posts -- including the Boulder campus's chief financial officer -- with retirees who are limited to working 140 days a year, but who receive nearly a full salary from the university plus pension payments from the state retirement fund.

For example, Ric Porreca, 53, senior vice chancellor and chief financial officer, retired on Feb. 28, 2011, and was rehired to the same post on April 1, 2011. He's now eligible for roughly $500,000 in combined CU salary and pension payouts for working the equivalent of seven months a year.

CU officials acknowledged that they did not announce the retirements of Porreca or Jeffrey Lipton, 59, the vice chancellor for administration, to the broader Boulder campus at the time.

But after the Camera raised questions last week about CU's working Public Employees Retirement Association retirees, Chancellor Phil DiStefano sent an e-mail to university employees explaining the arrangements -- which are allowed under state law -- that the campus made with Porreca, Lipton and Joey White, 56, the chancellor's chief of staff, whose retirement was announced in 2008.

In that memo, DiStefano said the employment of PERA retirees can be a cost-effective and valuable personnel strategy. He added that he plans to make changes to his administrative team over the next 1 1/2 years, announcing that Porreca has agreed to serve as the chief financial officer until the end of 2012.

CU's re-hired retirees

Under Colorado law, CU can fill 10 positions with employees who have retired and are collecting state PERA benefits. They can earn their full CU salary, minus a 10.65 percent penalty, and are limited to working 140 days a year. That list includes three of the Boulder campus's top administrators:

"I would much prefer that if they choose to work, that their work continues to benefit this university," DiStefano wrote. "This arrangement is not unique to these individuals or to higher education throughout the state."

But some CU employees say providing the perk to those in the upper echelon of the administration is unfair, because while they only are working 140 days a year -- and receiving pay from both CU and PERA -- the rest of the campus's employees are being asked to do more for less.

Ruth Covington, 49, a classified staff member who works in CU's molecular, cellular and developmental biology department, said the arrangement that allows upper-level administrators to collect state retirement funds while still working is upsetting when coupled with the hefty raises awarded last year to some high-earning administrators.

Covington -- who received a 3 percent, one-time bonus last year as a classified staff member -- said her raise was a "slap in the face" because her take-home pay is $400 less a month than it was four years ago, partly because of increased PERA contributions.

New state law

CU's ability to re-hire high-ranking retirees was enabled by a newly enacted state law allowing each campus and the system administration to designate 10 positions that can be filled by PERA retirees who work 140 days a year. There is no cap on the number of retirees who can work 110 days a year -- a more common arrangement in state government.

According to the text of the legislation, the provision is intended to help the university -- and other colleges -- fill positions where there is a critical shortage of qualified candidates and where the retirees bring unique experience or qualifications to the job.

The Boulder campus filled its 10 slots with the three senior administrators, plus workers who occupy lower-level positions such as office manager, research associate and director of outreach. The list also includes former women's basketball coach Ceal Barry, who earns $51 an hour for her associate athletic director position, according to the university. In January, CU paid her $4,904.85 for her 96 hours of work.

Through the part-time arrangement, Porreca, Lipton and White each still earn their full salaries, but with a 10.65 percent PERA-levied penalty, according to CU system spokesman Ken McConnellogue.

Porreca's annual salary is $292,282 -- which accounts for that penalty on his original $327,120 salary. PERA payments are private, but an eligibility chart shows Porreca, who started at CU in 1982, will earn at least 68.2 percent of his highest average salary -- calculated over three years -- for the rest of his life. That translates to more than $200,000 a year.

Lipton originally retired in May 2006, and has been re-hired in several roles on campus -- including jobs in the office of Planning, Budget and Analysis and in a position managing the campus's real estate portfolio.

He began in August 2011 as the interim vice chancellor for administration, which oversees units on campus including police, human resources, facilities management and environmental health and safety. Part of his job is to evaluate his own position and determine whether it should be restructured.

Lipton's yearly salary, after the PERA penalty, is $160,830. CU gave Lipton a 39 percent raise when he transitioned from his real estate role to the vice chancellor job between fiscal year 2010-11 and fiscal year 2011-12.

Lipton, who began at CU in 1977, is eligible to earn at least 68.2 percent of his highest average salaries calculated over three years, according to the PERA eligibility chart.

CU pays White an annual salary of roughly $142,000 a year, when her PERA penalty is applied, and she is also eligible to draw from the state retirement fund.

The campus does not have any contracts with the working PERA retirees -- and the statute does not spell out how many hours must be worked in a day. But working PERA retirees' pensions can be penalized if they exceed the 140 days.

'Specialized skill set'

Bronson Hilliard, spokesman for CU's Boulder campus, spoke on behalf of Porreca, Lipton and White, and said that many of the working PERA employees put in long days.

Hilliard said it makes sense for the university to retain Porreca because the seasoned finance chief understands the university's complex budget situation.

The Boulder campus, Hilliard said, has a complicated budget process: The student government controls a $38 million budget, the university has an elected Board of Regents that sets the budget, and state funding is at 5 percent, the lowest in the nation.

"It's a very unique, peculiar set of budget circumstances that the university has," Hilliard said. "You have to weigh the costs of bringing in someone from the outside during this time of recession and the learning curve they'll face. The chancellor felt it's vital to have Ric's institutional knowledge. He's been here nearly 30 years and he knows every nook and cranny and corner of the budget and how it works. He brings a very specialized skill set to that job."

Jill Pollock, chief human resources officer with the CU system, said there are a few instances where the flexibility to employ a working retiree is beneficial to the university. She said that in some cases, the retiree can fill an interim position while the university searches for a more permanent hire; CU may hire a retired employee for a special, one-time project or the retiree may have a special skill set that is difficult to replace.

Need for reform

Penn Pfiffner, a former state house representative who is now a senior fellow with the Independence Institute, a conservative think tank, said that the PERA situation at CU fits into a broader problem with pensions for government employees and the sustainability of the retirement fund.

Senate Bill 1, passed in 2010, required PERA retirees to contribute to the employees' share of the fund if, while retired, they work for a PERA-covered employer. Previously, PERA retirees could collect their retirement benefits while working at their former job "part-time" without contributing to the fund -- which exacerbated PERA's shortfall, according to a 2010 Independence Institute report.

"The system has promised more than it can pay and we know that the taxpayers are on the hook for many billions of dollars," Pfiffner said. "That very generous retirement benefit needs to be reviewed by the Legislature and it cries out for substantial reform.

"Retirement benefits for government employees needs to fall more in line with those in the rest of the economy."

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